Erbe: Reconsider tax exemptions for religious institutions

While we’re on the topic of the fiscal cliff (that’s what everyone’s talking about, isn’t it?) let’s not forget that there’s one hefty sum Congress and the president could raise without too much trouble.

In April, a University of Tampa professor, Ryan Cragun, and two students examined U.S. tax laws to estimate the cost of tax exemptions for religious institutions. They came to the conclusion that by denying religious institutions tax exemptions on property donations, business enterprises, capital gains on investments and sales and “parsonage allowances,” the Treasury could raise as much as $71 billion a year.

Right now there are two complaints percolating through the Internal Revenue Service that challenge the ability of churches to take political stands and maintain their tax-exempt status. A watchdog group called Citizens for Responsibility and Ethics in Washington is asking the IRS to “investigate the U.S. Conference of Catholic Bishops for engaging in prohibited political activity in violation of its protected tax status.”

The Wisconsin-based Freedom from Religion Foundation has filed a complaint with the IRS about the activities of the Billy Graham Evangelistic Association.

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The bishops under investigation told Catholic laypersons they would go to hell if they voted for President Barack Obama. Billy Graham’s group ran newspaper ads in the Wall Street Journal, USA Today, and others, pressing voters to vote for candidates who support, “the biblical definition of marriage between a man and woman” and who protect “the sanctity of life.” There was only one such presidential candidate and that was Mitt Romney.

In addition, the San Francisco Chronicle online reports that before election day this year some, “1,600 religious leaders around the country ... talked politics from the pulpit, in an organized movement challenging a 1954 federal law that bans churches from supporting candidates during worship services. The Pulpit Freedom Sunday movement, organized by a Christian legal group in Arizona called Alliance Defending Freedom, encouraged pastors to ‘preach a biblically based sermon regarding candidates and the election without fearing that the IRS will investigate or punish the church,’ according to the group’s website.”

This effort was designed to provoke lawsuits. The 1954 law is rarely if ever enforced, but before that era, American churches received no special exemptions from the IRS. Even today churches are taxed if they engage in commercial activities and in certain other circumstances. They seem to do just fine, notwithstanding.

They were granted tax-exempt status because they were seen at the time as doing local communities an awful lot of good. And they legitimately still do some of that. But in the intervening half-century, some (not all) churches have become politically biased and outspoken.

This is where churches begin to undo the good that they legitimately perform (feeding the hungry and clothing the poor) and start contributing to an even more divided nation. That does no U.S. citizen any good.

Not all churches take political positions, and those that don’t should not lose their tax-exempt status. But it’s clear that when preachers allow politics to invade the pulpit, they have moved from being an asset to the community, into being an agent for increased divisiveness.

Eventually I believe the IRS and the Supreme Court will move to eliminate tax exemptions for politically divisive churches. That won’t happen anytime soon, but as churches become more like businesses and less like community do-gooders, this change seems inevitable. So while Congress is considering increasing individual tax rates and eliminating the home mortgage deduction, it might as well throw taxing politically active churches into the mix.